Tether (USDT) continues to dominate the stablecoin market, generating record daily revenues. As the most widely used stablecoin, USDT significantly boosts transaction fees on major blockchain networks like Ethereum (ETH) and Tron (TRX). Staticcoin’s high transaction volume and strategic investments have positioned Tether to offer a revenue-sharing program.
Tether’s revenue streams are impressive, with the stablecoin issuer earning over $93 million weekly fees. Daily fees can reach up to $13.4 million on particularly active days. Much of Tether’s revenue comes from interest earned on US Treasury Bills, with Tether Inc. holding more than $97.6 billion in US government debt. This makes Tether the 18th largest holder of US treasuries globally. Unlike other stablecoins like BlackRock’s BUSD, Tether retains the yield from these treasuries to expand its token supply.
Tether’s growing influence in the market
Tether became the third-largest buyer of three-month US Treasury Bills in the second quarter, following the United Kingdom and the Cayman Islands. This strategic move underscores Tether’s growing influence in the financial markets and its commitment to maintaining robust reserves. With such substantial holdings, Tether is well-positioned to increase its USDT supply in the coming months.
Tether’s smart contract on the Ethereum network generates more than $32,000 daily fees, which are shared with Ethereum validator nodes. USDT on Ethereum remains one of the most active smart contracts over the long term. The stablecoin protocol generated over $400 million in fees in the past month alone, highlighting its dominance in the market. Despite this, smaller protocols that share fees with token holders are still far behind Tether’s revenue generation.
Stablecoins compete in a growing market
Tether faces competition from other asset-backed stablecoins, some offering revenue-sharing features. However, these alternatives often have higher risks, especially in illiquid or niche markets. According to Tether’s attestation, for the first half of 2024, the company reported a profit of $5.2 billion. Some of these profits will likely be reinvested in US Treasury Bills, further solidifying Tether’s position as a major player in the stablecoin market.
Tether’s USDT supply has expanded to 118.19 billion tokens and has a significant presence on Ethereum and Tron. USDT is widely used for micropayments in its Toncoin version and larger transfers on the Tron network. The stablecoin has also seen increased adoption on the Optimism blockchain, while networks like Polygon and Base have become strongholds for USDC.
Ethereum’s stablecoin ecosystem thrives
On Ethereum, stablecoins like USDT will fuel the growth of major crypto use cases in 2024. Aave (AAVE), a leading DeFi protocol, utilizes over 29% of the top 10 stablecoins’ supply, including USDT. This high demand for stablecoins has contributed to a 28% increase in transfers over the past three months.
Binance, Coinbase, and Uniswap remain top users of stablecoins, while MEV bots account for 9.4% of transactions involving the top 10 stablecoins. Since late 2023, Ethereum has added over 15 billion USDT tokens, further cementing its role as a key player in the stablecoin market.
As USDT continues to dominate, Ethereum redistributes these stablecoins to Layer 2 networks like Arbitrum and Optimism. While USDT was once considered a systemic risk, its revamped reserve structure has made it a valuable asset backing other DeFi protocols.